Brazilian Planning Minister Demands Government Put Pension Reform First

Corruption scandal, 2018 general elections causing distractions for lawmakers.

According to Brazil Planning Minister Dyogo Oliviera, the government needs to focus on changing laws for its ailing pension in Congress instead of on a tax reform that is not gaining the political backing lawmakers had hoped for.

“There are no conditions to push two reforms of this magnitude through Congress at the same time,” he told journalists following a Sao Paulo event on Monday. “The first reform that we need is the pension reform.”

Brazil’s government has had a troubled time trying to agree on a solution to the country’s pension system due to the upcoming 2018 general elections and an ongoing corruption scandal involving current President Michel Temer and two former presidents, Luiz Inácio Lula da Silva (Lula), and his successor, Dilma Rousseff, distracting lawmakers.

While economists agree that pension reform is essential to dodging an eventual public debt crisis, unions are against proposals, calling for a minimum retirement age as well as benefit reductions.

In addition, the government has yet to present its tax proposal—a priority of President Temer. A separate bill presented by Congressman Luiz Carlos Hauly, which looks to simplify the country’s tax system, has been analyzed by legislators.

According to Oliviera, the government has asked BNDES—the world’s third-largest state development bank—to return $50 billion reais ($16.2 billion) to the Treasury this year as well as 130 billion reais in 2018. Oliviera also noted that BNDES will have to change its business model to depend on market resources rather than government funds.

The minister also mentioned how, after approving a looser budget target in Congress, the government was attempting to unfreeze between 8 billion and 10 billion reais in public spending later this month, saying the approximate number had yet to be confirmed. He also said Brazil will face a slow recovery from a large recession and that it will probably take 10 to 12 years to return to 2014 numbers.

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